I was having a lunch with a friend today. And he told me, next month, i.e. November, the largest Chinese online book retailer, Dangdang, will be going public in Nasdaq.
As one of the first major Chinese e-commerce sites going public, it must create lots of fuss. I heard from an investment bank source that Dangdang will go for a very aggressive valuation, about 1 billion. With about only US$5 million in profit last year, it suggests 200 times earning.
However, growth of the company’s core business (selling books) is slowing down (60% last year) as it is over 10 years old. Its new business line, which sells everything from electronics to linens, slipper, home decor, milk powder, etc, grows fast, over 230% last year. But that is only a small portion of the business. And it is doubtful Dangdang has any advantages in this area, as there are many competitors selling those items online. Dangdang is only famous for book in China.
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